A company is launching a new product. The variable cost of the product is $4.50 per unit and fixed costs total $21,000 per period. The initial selling price is to be set by adding a mark-up of 10% to total unit cost based on estimated sales of 6,000 units per period. The company does not hold any inventory.

Required:

1. Calculate the initial selling price of the product.

After the initial launch phase:

1. The selling price is subsequently set at $950 per unit;
2. Sales become 8,000 units per period;
3. Costs are as set out above.

Required:

2. Calculate, after the initial launch phase:

1. the expected profit per period;
2. the contribution to sales ratio (as a % to one decimal place);
3. the break-even sales units per period;
4. the total cost per unit.